B.C. housing starts sank in June as a steep decline in the Vancouver Census Metropolitan Areas (CMA) offset gains elsewhere in the province. Total urban-B.C. starts fell to a seasonally adjusted annualized rate (SAAR) of 34,300 units down 15% from the 40,600 unit pace in May and 9.8% below year-ago levels. Provincially, multi-family construction fell 21% from May to 24,600 units while detached starts rose by a modest 4.4% to 9,700 units SAAR.
Starts in the Vancouver CMA fell from a 26,500 pace in May to 17,000 in June to account for most of the decline. While the lowest since January 2017, volatility is the norm and a bounce back in July would not surprise. That said, the trend has eased from a near-record fourth quarter. Capacity factors may be holding back starts given a record high number of units under construction and rising construction times.
Offsetting this drop were steady but elevated starts in Kelowna and a surge in Victoria-area activity. Population and strong employment growth in the latter have contributed to increased construction in recent years.
Year-to-date growth narrowed to 2.8% from 6.2% in May. Combined apartment and townhome units were still 6% higher than 2017’s first half, reflecting a shift toward affordable condominium and townhome product as well as a rise in rental construction. Kelowna CMA starts fell 30% through the first half, with Abbotsford-Mission down more than 60% due to fewer multi-family starts.
Inclusive of rural B.C., housing starts are forecast to ease 3.5% to 42,000 units this year.
Recent Labour Force Survey estimates have pointed to a slide in the number of people working in B.C. While natural to attribute this erosion to a weaker demand environment, job-vacancy data suggest intensifying labour shortages, which could be constraining hiring.
First-quarter job vacancies in B.C. ballooned 35.7% from same-quarter 2017 to reach 92,680 positions. This was the second-largest increase among provinces, behind only Quebec. The Lower Mainland-Southwest saw the addition of 16,710 vacant positions (up 34%) from the previous years.
B.C.’s job-vacancy rate rose one percentage point from a year ago to 4.2% and compared with a national job-vacancy rate of 2.9%. The gap suggests significant labour shortages and skills mismatch in B.C., in part reflecting a period of strong growth and hiring in recent years.
Among economic regions, job-vacancy rates were highest in the Lower Mainland-Southwest, Thompson-Okanagan and the Northeast, at above 4%. These areas represented three of the four highest job-vacancy rates in Canada. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
